Cutting Off Trade With Bangladesh Would Hurt Workers

Kimberly Ann Elliott is a senior fellow at the Center for Global Development and a member of the Department of Labor’s National Advisory Committee on Labor Provisions of U.S. Free Trade Agreements.

May 2, 2013

Clothing accounts for 80 percent of Bangladesh’s exports and the industry employs over 3 million workers. As bad as conditions in the factories are, workers choose to take these jobs because they are better than any alternative they have. For the young women that make up most of the workforce, it allows them to delay marriage and child-bearing, which has numerous benefits for them, their families, and the country’s development.

So cutting off trade with Bangladesh is not a solution. The brand-name buyers should stay and be part of the solution.

If importers cooperate, and help workers get involved, conditions can improve, avoiding both further disasters and hopeless poverty.

The question is how to overcome the collective-action problems that plague the apparel industry — the fact that no one wants to act unless everyone does. Individual factory owners are afraid to demand higher prices for their goods because they might lose business to a competitor. Multinational buyers are reluctant to offer higher prices because it could erode their profits and disappoint shareholders. And governments are afraid to raise or enforce
labor standards because investors and buyers can move to another low-wage country.

In the short run, a joint pool with contributions from the major buyers of goods made in Bangladesh could help to finance immediate and relatively inexpensive improvements in health and safety, like training of managers and inspectors, ensuring that there fire exits and fire extinguishers that work, and checking the structural integrity of buildings.

And they should ensure that the workers’ are involved and have the tools to protect themselves. Over the medium run, Bangladesh could collaborate with the International Labor Organization and International Finance Corporation on a Better Work program to improve labor conditions and firm productivity. That would help workers, and firms, now and in the future, by helping the industry grow.

Without a commitment from the industry and government in Bangladesh to reform, tragedies like these will continue to happen and buyers will eventually conclude that it is too costly to their reputation to remain. And that will be a tragedy for many times the number of people killed in the building collapse.

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